Can anyone tell me if this is legal or not?

Asked by Nm82, Union Grove, WI Sat Apr 11, 2009

short sale. The seller of the house is my boyfriend's 2nd cousin, who is losing the house because he is in jail. My realtor just told me the seller's agent just called her and said that there is bank paperwork stating that anyone within arm's reach of the seller is not able to put an offer in the house or buy it. We live in Wisconsin. To me, this feels like discrimination. We are planning to put 20% down, so it's not like we aren't likely loan canidates.

I would be interested if anyone has ever heard of this and if I am able to fight it. Thanks in advance!

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Lori Jeltema, Agent, Suffolk, VA
Sat Apr 11, 2009

I don't think that being a cousin is a protected class. You can consult an attorney of course but it appears that you are referring to an 'arms length' exclusion. The sale is supposed to occur without any influence of family, etc., I've seen listings where the seller has the listing put right in the listing 'uncle joe smith is excluded from being able to purchase the home' etc.,

A 'non arms length sale' occurs when the buyer has influence over the sale. Sorry that the house you want may not be available to you. A lot of these situations happen because, at the end of the day, the people involved with the sale and the banks do not want any scent of an unfair arrangement.

Haven't been in UG for years, grew up in Bristol....
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Vicky Chrisn…, Agent, Purcellvile, VA
Sat Apr 11, 2009
It's a reasonable and required clause of all short sales. It is to prevent fraud.

Regardless of your intention, some might be attempting to purchase the home to help out the cousin and to sell it back to him when he gets out of jail. There have been many cases of friends or family members doing this and continuing to allow the previous owner to rent the home back or even just to live there - for less than when they owned the place. These are the things fraud is made of. So, in general, I support the policy.

If your intentions are pure, consider writing a letter to the bank explaining your relationship - whatever it is -and your reasons for wanting to purchase THIS home. Who knows? Maybe they will approve it. But, I urge you to be honest and forthcoming.
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Lori Jeltema, Agent, Suffolk, VA
Sun Apr 12, 2009
True story that happened here - A military guy was away on duty for a long tour. His wife deliberately stopped making payments (he had no idea, thought everything was hunky dory). The house went into foreclosure and the wife's boyfriend bought the house and the wife and her boyfriend moved back in. Now, even the 'arms length' rule wouldn't have helped on that one, but stuff like that does happen. I have a few suggestions on what type of punishment should be given out for that type of deal, but I don't think it's legal. Your intentions, like Vicky said, are probably good so you could try her suggestion - may work.
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